Correlation Between Cathedra Bitcoin and BitFrontier Capital

Can any of the company-specific risk be diversified away by investing in both Cathedra Bitcoin and BitFrontier Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cathedra Bitcoin and BitFrontier Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cathedra Bitcoin and BitFrontier Capital Holdings, you can compare the effects of market volatilities on Cathedra Bitcoin and BitFrontier Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cathedra Bitcoin with a short position of BitFrontier Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathedra Bitcoin and BitFrontier Capital.

Diversification Opportunities for Cathedra Bitcoin and BitFrontier Capital

0.32

Correlation Coefficient

Cathedra Bitcoin  BitFrontier Capital

Weak diversification

The 3 months correlation between Cathedra and BitFrontier is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cathedra Bitcoin and BitFrontier Capital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitFrontier Capital and Cathedra Bitcoin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cathedra Bitcoin are associated (or correlated) with BitFrontier Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitFrontier Capital has no effect on the direction of Cathedra Bitcoin i.e., Cathedra Bitcoin and BitFrontier Capital go up and down completely randomly.

Pair Corralation between Cathedra Bitcoin and BitFrontier Capital

Assuming the 90 days horizon Cathedra Bitcoin is expected to under-perform the BitFrontier Capital. But the otc stock apears to be less risky and, when comparing its historical volatility, Cathedra Bitcoin is 1.94 times less risky than BitFrontier Capital. The otc stock trades about -0.01 of its potential returns per unit of risk. The BitFrontier Capital Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.26  in BitFrontier Capital Holdings on August 31, 2024 and sell it today you would earn a total of  0.02  from holding BitFrontier Capital Holdings or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cathedra Bitcoin  vs.  BitFrontier Capital Holdings

Cathedra Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cathedra Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cathedra Bitcoin is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BitFrontier Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BitFrontier Capital Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, BitFrontier Capital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cathedra Bitcoin and BitFrontier Capital

The main advantage of trading using opposite Cathedra Bitcoin and BitFrontier Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cathedra Bitcoin position performs unexpectedly, BitFrontier Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BitFrontier Capital will offset losses from the drop in BitFrontier Capital's long position.

The idea behind Cathedra Bitcoin and BitFrontier Capital Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.